Why Carnival’s stock fell early today

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What happened

Cruise line actions Carnival (NYSE: CCL) fell to 3% at the start of Wednesday’s session as the Centers for Disease Control and Prevention (CDC) began monitoring more vessels. The decline didn’t last long, however, and stocks were only down 0.5% as of 1:30 p.m. ET today.

So what

The CDC said on Tuesday it was investigating or observing at least 86 cruise ships as the omicron variant increased globally. Ships are under investigation if at least 0.1% of passengers test positive for COVID-19, which would be five passengers on a 5,000 passenger ship.

Image source: Getty Images.

Few industries have been hit as hard by the pandemic as the cruise industry, so any shutdown or reduction in service would be bad news. But the CDC’s reduction in quarantine guidelines and the lack of lockdown would already indicate that the cruise industry will overcome this current challenge. This is probably why the stock recovered after processing the first reports.

Now what

The continuing threat of omicron outbreaks is worth watching, but does not appear to be a huge risk to the cruise industry today. Business is returning to normal and more and more ships are returning to the water. In the long run, this company does recover, and while I don’t think this is a great investment opportunity, I see no reason to panic and sell cruise line stocks today.

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Travis Hoium has no position in the stocks mentioned. The Motley Fool recommends carnival. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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